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By John Revill
ZURICH May 3 LafargeHolcim got off to a
promising start in 2017 with sales and profits in the first
three months beating forecasts, the Franco-Swiss cement giant
said on Wednesday, but failed to allay market concerns over the
company's direction while it replaces its chief executive.
Eric Olsen announced last month he was quitting in July
after the world's largest cement maker admitted making payments
to armed groups to keep its factory running in war-torn Syria.
Olsen, a French-U.S. dual citizen, has denied involvement in
or knowledge of the affair and on Wednesday said there had been
"some tensions" at the company unconnected to the Syrian inquiry
and he thought it was in the best interests of everyone for him
to move on.
"It is exactly two years after (my) start date and I am
going to be leaving a group in great shape with clear targets in
place," Olsen told reporters after pointing to an improving
performance in many of LafargeHolcim's markets where the company
has increased sales volumes and prices.
But the shares were down 1 percent at 56.80 Swiss francs by
Kepler Cheuvreux analyst Josep Pujal said the results were
not the triumph they appeared to be, with core profit down 11
percent and noting a negative free cash outflow of 836 million
francs, compared with an outlfow of 618 million francs in the
same period last year, before merger-related costs were taken
The biggest problem lay with Olsen's sudden resignation and
concerns for a resulting lack of focus on financial targets,
First-quarter underlying operating profits before interest,
tax, depreciation and amortisation slipped 4.7 percent to 801
million Swiss francs ($808 million), beating the average of
analysts' forecasts of 783 million francs..
Sales fell 7.1 percent to 5.63 billion francs, partly
reflecting the sale of businesses including operations in Chile
and Vietnam during 2016 and ahead of the average of analysts'
forecasts of 5.52 billion francs.
"Our good Q1 performance has got us off to an excellent
start for 2017 and marks our fourth consecutive quarter of
earnings growth," said Olsen, adding that the results were
buoyed by strong trading in March as a pick-up in construction
activity in Europe and North America gathered pace.
But the company now faces a leadership gap with his
departure of Olsen, who had won over critics initially concerned
by his lack of CEO experience, having previously been head of
human resources and then operations at Lafarge.
The Zurich-based company, created by a merger of France's
Lafarge and Switzerland's Holcim in 2015, has also changed its
chairman and chief financial officer in the last 18 months,
while several members of its executive committee are also
relatively recent appointments.
"LafargeHolcim now faces a lost 12 months as it looks for a
successor, who will need to get to know the business, build up a
team, and agree on a new set of medium-term targets,"
Bernstein analyst Phil Roseberg said.
($1 = 0.9912 Swiss francs)
(Editing by Greg Mahlich)